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US-China Relations

UDN: Beijing May Impose Sanctions on U.S. Companies That Sell Arms to Taiwan

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that Geng Shuang, spokesperson for the Chinese Ministry of Foreign Affairs, commented on the newly announced U.S. arms sales to Taiwan. At a press conference, Geng said that the Trump administration’s approval of the sale of arms was a serious violation of the basic norms of international law and international relations. He confirmed that, to protect China’s national security, China will impose sanctions on the U.S. companies involved in this transaction. The companies may include General Dynamics (for M1A2 Tanks), BAE (for M88A2 armored recovery vehicles), Oshkosh Corporation (for M1070A1 Heavy Equipment Transporters), and Raytheon (for Stinger surface-to-air missiles). This round of arms sales to Taiwan has the highest dollar amount value among all sales made by the Trump administration, reaching around US$2.2 billion.

Source: UDN, July 13, 2019

China’s Ministry of Commerce Admitted Manufacturers Are Moving Out of China

Well-known Chinese news site Sohu recently reported that multiple senior leadership team members of the Chinese Ministry of Commerce jointly held a press conference on July 2. The Ministry admitted that industrial players and even supply chains are moving out of China. However, they suggested that it is normal for companies to move in and out as their globalization priorities change. It is understandable that places with lower costs may attract some companies to move out of China. One cannot simply conclude that this is a direct result of the China-US trade friction, since there are many causes. In the press conference, the Ministry also mentioned that its focal points for work this year are to “stabilize foreign trade” and to “stabilize foreign investments.” The Ministry is currently “cleaning up” existing regulations in preparation for the new Foreign Investment Law to take effect next January.

Source: Sohu, July 2, 2019

Global Times: The “Employment Boom” in the West Hides Trouble

Global Times recently published a commentary on the obvious improvements made in reducing unemployment in the West. The article suggested that, although the industrialized countries in the West, especial the United States, enjoyed a so-called “full employment” in the past couple of years, yet many potential issues are moving towards crisis. The commentary says the major tax cut may have boosted the economy but that force is weakening, especially when the budget deficit continues to grow. In the meantime, the labor participation rate remains flat or even worse in the West. Trade friction on the global level also poses a threat to economic growth. The Brexit uncertainty is a good example of the factors that may slow down global growth, which will, in turn, slow down employment. The author concluded that it is much harder to sustain an employment boom in countries like the United States. How long the current state can last is highly questionable.

Source: Global Times, July 6, 2019

LTN: Huawei’s Software Defect Rate Is 55 Percent

Major Taiwanese news network Liberty Times Network (LTN) recently reported that the security firm Finite State’s latest research report showed that, among a sample of nearly 10,000 Huawei software images, 55 percent had at least one potential backdoor vulnerability. The research indicated that, among similar products in the industry, Huawei’s security level ranked lowest nearly across the board in all of the technical categories that were inspected. This poses a high risk to Huawei’s customers. The research also showed that the security posture of Huawei’s products did not improve over time. In addition, many security holes were not patched, or the software did not receive upgrades. Similar products manufactured by Huawei’s competitors like Nokia and Ericsson scored much higher. Nokia’s Chief Technology Officer Marcus Weldontold also claimed to have far better information security scores. Huawei refused to comment on the completeness and objectiveness of the research report but insisted the company did not intentionally plant a backdoor into any of its products.

Source: LTN, June 28, 2019

Qiushi: Keep a Clear Mind and Fight till the End

Qiushi, the official journal of the Chinese Communist Party, published a commentary in its twelfth Issue for 2019. The subject was the trade war between China and the United States. It urged keeping a clear mind and fighting until the end. Xinhua and People’s Daily have since re-published the commentary. The following is a summary of some of the highlights:

The Sino-U.S. economic and trade relationship is not a “zero-sum game.” Rather, it is mutually beneficial.

The “fair trade” that the United States emphasized is not really fair at all. The United States purchases resources, labor, and products at a low cost from developing countries while selling its technology products at a high price.

Unilateralism is a dead end. Only through open cooperation can one gain more development opportunities and more room for development.

The United States hegemonism in the area of technology will not succeed. China’ technological advances are the result of the competition and hard work of the Chinese people and not the result of stealing or forced technology transfer.

The ultimate pressure applied to China will not work because such pressure will expose the true nature of the U.S. hegemony and further isolate the United States in the international community.

The trade protectionism of the Trump Administration will not bring the manufacturing industry back to the United States. On the contrary, it will seriously damage the global value chain, impact global resource allocation, generate widespread negative spillover effects, and reduce the efficiency of the global economy.

The trade war between China and the United States will not promote the prosperity of the U.S. economy. What goes around comes around. There will be no winner. Whoever initiates the trade war will eventually hurt themselves.

The Sino-U.S. trade war will not crush the Chinese economy.

The commentary concluded by stating that China has been firm and consistent in its position regarding the key differences between China and the United States on the trade war: zero-sum game vs. mutual benefit and win-win; opposition vs. cooperation; monopoly vs. competition; and unilateralism vs. multilateralism.

Source: Xinhua, June 16, 2019